Moneycontrol Pro Panorama | Resilient realty

India's real estate sector is navigating a period of recalibration

Dear Reader,

The Indian real estate sector is presenting a complex picture, with residential property prices in select premium locations experiencing significant corrections even as the overall market continues its upward climb.

Recent data from PropEquity reveals striking price reductions in some of the country's most prestigious micro-markets. Mumbai's upscale Worli neighbourhood has witnessed the most dramatic decline, with launch prices plummeting 45 percent between April and August this year, though sales volumes doubled to 200 units during the same period. In Gurgaon's Sector 63A along Golf Course Extension Road—renowned for luxury properties—prices dropped 36 percent while sales fell to a third of previous levels. Hyderabad's Kokapet area, another high-end residential hub, saw a more modest 9 percent price correction.

However, industry experts caution against reading too much into these isolated instances. The affected properties belong to the luxury housing segment, which experienced rapid appreciation over recent years, and analysts suggest the current dip represents a natural cooling period rather than a fundamental shift in market dynamics. Indeed, other areas across Mumbai, the National Capital Region, and Hyderabad have continued to register price increases.

The broader residential market remains robust. According to Anarock, Delhi-NCR recorded an impressive 24 percent annual price increase during the July-September quarter, driven by sustained demand for luxury homes. Similarly, the Mumbai Metropolitan Region saw prices rise 11 percent and 13 percent in the second and third quarters of fiscal year 2025, respectively.

While residential real estate shows mixed signals, the commercial segment is demonstrating remarkable strength through unprecedented capital inflows. According to Equirus Capital, the sector achieved its highest fundraising in seven years, mobilising Rs 23,080 crore across 12 deals. Since FY18, cumulative capital raised was a total of Rs 72,331 crore, with Real Estate Investment Trusts (REITs) leading at Rs 31,241 crore, followed by large-cap firms (Rs 20,437 crore), mid-cap companies (Rs 12,496 crore), and small-cap players (Rs 8,156 crore).

Grant Thornton Bharat's analysis underscores this momentum, reporting that the July-September 2025 quarter marked a historic milestone with 42 deals worth $2.9 billion—the highest quarterly investment ever recorded in India's property market. The September quarter featured nine public market transactions, including five IPOs and four qualified institutional placements (QIPs), alongside 33 private deals valued at $1.8 billion.

Merger and acquisition activity remained brisk with 21 deals totalling $843 million, including notable transactions such as The Phoenix Mills Ltd's acquisition of Island Star Mall Developers and Mindspace REIT's purchase of The Square—its first third-party acquisition since listing. Private equity made a strong comeback with 12 deals worth $859 million, representing a 71 percent increase in deal volume and 48 percent rise in value during the September quarter as compared to the previous quarter.

The public markets proved particularly receptive, with five IPOs raising a combined $805 million and four QIPs contributing another $344 million. Knowledge Realty Trust's IPO led the pack with a substantial $547 million fundraise, underscoring investor confidence in India's real estate landscape.

India's real estate sector is navigating a period of recalibration where select premium residential micro-markets in the luxury segment have experienced notable price corrections, but the overall residential market continues to demonstrate strength, with major metropolitan regions posting double-digit price growth driven by sustained demand.

More significantly, the commercial real estate sector's record-breaking capital inflows and unprecedented deal activity signal deep-rooted investor confidence in India's long-term property market fundamentals.

As the sector attracts institutional capital through REITs, IPOs, and private equity, India's real estate market appears well-positioned for sustainable growth, even as it sheds some of the froth in the residential market. For investors and homebuyers, this recalibration may present opportunities in a market that is becoming more balanced and resilient.

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